Canada housing more affordable than ever

The global economic downturn is a mixed blessing for home buyers - if you're lucky enough to hang on to your job, you should be in a much better position to buy a house, according to a report released Thursday by RBC Economics.

"Declining consumer confidence amid dimming employment prospects and the turmoil in credit markets have had a predictable impact on Canada's housing markets -- home sales have dropped, prices have given into intense downward pressure and residential construction has slowed substantially," said RBC senior economist Robert Hogue, the report's author.

Continuing economic troubles through spring, the key home-buying season, "will put the entire housing sector to the test in coming months," he said.

While Western Canada felt the downturn first, a slowed housing market - spurred by tighter lending conditions and a general reluctance on the part of consumers to spend on big-ticket items--has now spread across the country.

But if slow sales and lower prices are bad news for home sellers and developers, they're music to the ears of people looking to buy, because they are making homes more affordable, according to RBC.

The RBC affordability measure determines the percentage of pre-tax household income that is needed to own a home - to pay the mortgage, taxes and utilities.

Those costs improved at the national level by 2.3 to 3.5 percentage points in the fourth quarter from the previous quarter across all housing categories, the report said. The detached bungalow moved to 43.7%, the standard townhouse to 35.4%, the standard condo to 30.1% and the standard two-storey home to 50%.

The higher the reading, the more expensive it is to own a home; in this scenario, the ownership costs for a two-storey home would eat up 50% of pre-tax income.

Lower mortgage rates were the principal reason for the improvement across the country, though rising income was also a factor, the report said.

"Low mortgage rates and persisting downward pressure on housing prices will continue to help repair affordability although slowing income growth will act as a restraint," said Hogue.

Quebec is the most affordable province for buyers who are in the market for the average bungalow, while Montreal and Edmonton are the most affordable of the big cities, according to RBC.

DETACHED BUNGALOWS:

Average price / %change

Canada $296,200 -0.1

B.C. $480,000 -2.8

Alberta $345,000 -6.1

Saskatchewan $288,100 9.4

Manitoba $214,300 2.6

Ontario $311,900 0.9

Quebec $190,600 1.8

Atlantic $181,600 5.5

Toronto $428,100 0.3

Montreal $236,700 1.8

Vancouver $576,300 -4.6

Ottawa $321,300 4.1

Calgary $410,300 -4.5

Edmonton $329,200 -8.0

canada.com